2012 Election

JFK did all the Democrat things to Stimulate the Economy out of Recession but none of it Worked

John Fitzgerald Kennedy (JFK) was a Cold War warrior. Not to mention a World War II combat veteran. He warned Nikita Khrushchev that any Soviet interference with U.S. access to West Berlin (located behind the Iron Curtain in East Germany) would be an act of war. Which meant a nuclear war with the USSR. The Soviets responded by building the Berlin Wall between East and West Berlin. Blocking free passage between East and West. JFK authorized the Bay of Pigs Invasion to topple the Soviet-backed Castro government in Cuba. The invasion failed for the lack of air support. Castro feared another US invasion. Shortly thereafter the Soviets installed intermediate-range ballistic missiles in Cuba. To counter US missiles placed in Turkey. Once discovered JFK ordered a quarantine of Cuba. A US naval blockade. Leading to the Cuban Missile Crisis. And the closest the US and the USSR ever came to all out nuclear war. Khrushchev and JFK finally resolved the crisis. Khrushchev agreed to remove their missiles with a public US guarantee that they would never invade Cuba. And a private promise to remove those US missiles from Turkey.

JFK sent the Special Forces to South Vietnam to stem the spread of communism in Southeast Asia. He also initiated the coup that toppled the government of Ngo Dinh Diem (though he did not call for his assassination). Leading to America’s long involvement in the Vietnam War. And Kennedy’s Secretary of Defense helped make all of this military action possible. Robert McNamara. One of the ‘Whiz Kids’ who helped to rebuild the Ford Motor Company. And he ran the Department of Defense like he ran Ford. By the numbers. He made it more efficient. Saving a lot of money from the existing budget. While JFK added an additional $8 billion (about $58 billion in 2011 dollars) of defense spending. Paying for a lot of the weapons a Cold War warrior needed. However, he was still concerned about the size of the deficit. So JFK also included some domestic spending cuts to help offset the increases in defense spending. But it wasn’t enough. He had a deficit. Worse, he had a recession.

JFK did all the Democrat things to stimulate the economy out of recession. Typical Keynesian economics stuff. Government spending. And keeping interest rates artificially low. But it wasn’t working. One of the problems was that Keynesian stimulus just doesn’t work. But another problem was the baby boom following the war. Who grew up and were looking for jobs in the Sixties. That just weren’t there. He needed some really solid economic growth to create those jobs. And for that he turned to supply-side economics. What we would later call Reaganomics. He created a more business-friendly environment. He offered businesses tax credits for investments in new machinery and equipment. He accelerated depreciation schedules, allowing businesses to expense their assets more quickly. Which encouraged investment into new assets. And he proposed tax cuts on both business AND personal income. It worked. Unleashing an economic boom that lasted until 1966.

When Reagan entered Office he did what JFK did and created a Business-Friendly Environment

Ronald Reagan was a Cold War warrior. While President Carter pursued a policy of detente with the Soviet Union Reagan’s policy was more in keeping with JFK’s policy. He called the Soviet Union the Evil Empire and pursued a goal of destroying it. And like Kennedy he built up a strong military. Reagan invaded Grenada when hard-line communists overthrew a moderate socialist government. While there were Cuban construction workers and military personnel building a 10,000 foot reinforced runway. Which would be handy for the Soviets to use in their Central American activities. Which Reagan also opposed in Nicaragua. As he helped the Mujahideen resist the Soviets in Afghanistan. Reagan revived the Carter-canceled B-1 Lancer bomber program. He introduced the MX intercontinental ballistic missile program. And when the Soviets deployed SS-20 intermediate-range ballistic missiles Reagan deployed Pershing medium-range ballistic missiles in West Germany. Then he took it up a notch and introduced a strategic ballistic missiles defense system. The Strategic Defense Initiative (SDI). When Reagan gave a speech at the Berlin Wall’s Brandenburg Gate with Mikhail Gorbachev in attendance he said, “General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and Eastern Europe, if you seek liberalization, come here to this gate! Mr. Gorbachev, open this gate! Mr. Gorbachev, tear down this wall!”

The Soviets couldn’t keep up with the spending as their command economy was a mess. It was a different story in America. In fact, it was Morning in America. Not only did the Americans spend the Soviets to the brink of collapse they did that in what those on the Left call the Decade of Greed. Because economic times were so good there was excessive materialistic consumption. So while the Soviets stood in line for soap and toilet paper the Americans enjoyed Sony Walkmans, CD players, VCRs, new cars, big houses and all the delicious food you could eat. Americans had a weight problem. While the Soviets had a malnutrition problem. The Soviet Union would collapse about 3 years after Reagan left office. George H. W. Bush, Reagan’s vice president, having the honor to be in office at the end of the Soviet Union.

Like JFK Reagan also had a recession. As he entered office following the disaster of the Carter presidency. Carter did all of the Keynesian stuff like JFK. Using inflation to try to end unemployment. Which only gave the nation high inflation and high unemployment. Stagflation. And malaise. But unlike JFK Carter refused to try something different when it didn’t work. When Reagan entered office, though, he did what JFK did. He created a business-friendly environment. That included tax cuts. Tax cuts that stimulated economic activity. So much economic activity that federal tax receipts went up even though tax rates went down. So Reagan’s deficits weren’t a revenue problem. They were a spending problem. Much like they are today. Much like they always are.

If JFK and Ronald Reagan were Alive Today they would likely Endorse the Republican Candidates Mitt Romney and Paul Ryan

The attacks on 9/11 didn’t just happen. It was the last in a chain of events. There was the 1993 World Trade Center Bombing. The New York City Landmark Bomb Plot (1993). The Khobar Towers Bombing (1996). The United States Embassy Bombings (1998). The Millennium Attack Plots (2000). The USS Cole Bombing (2000). Then 9/11. Until 9/11 we treated all of these events as criminal offences. Not acts of war. While Osama bin Laden and his al Qaeda acted from the start as if they were fighting a war. Not breaking the law. President Obama is also reluctant to call these radical Islamist attacks war. When a radical Muslim in the US Army killed fellow soldiers on an Army base because of America’s ‘crimes against Islam’ the president called that workplace violence. And when an American ambassador asked for additional security in Benghazi someone in the Obama administration denied the request because President Obama had killed Osama bin Laden. And defeated al Qaeda. Having to beef up security to defend against a growing al Qaeda presence, though, would have gone against that narrative of defeating al Qaeda.

The current so-called economic recovery is about the weakest on record. Despite doing the normal Keynesian things to revive the economy. Including an almost trillion dollar stimulus package. Leading to record deficits. Money the government had to borrow. Borrowing which required an increase in the official debt ceiling. This excessive debt and government spending cause the first downgrade of US sovereign debt. All of this to fix the economy. Only the economy is not fixed. And the people who can’t find a full time job holds steady at 14.7% (U-6 unemployment rate).

So if JFK and Ronald Reagan were alive today who would they support in the 2012 election? Who would a couple of Cold War warriors who risked nuclear war to protect the United States support? These practitioners of supply-side economics who brought their economies out of recession to record economic growth? Probably not the candidates foolishly hanging on to failed Keynesian policies despite a real unemployment rate of 14.7%. Or the ones refusing to accept that we are still being targeted and killed by al Qaeda and other radical Islamist elements in the ongoing War on Terror. No. If JFK and Ronald Reagan were alive today they would likely endorse the Republican candidates Mitt Romney and Paul Ryan.

2012 Election

A Strong President and a Few Judges could defy Congress and the State Legislatures and Govern as They Please

Woodrow Wilson became president in 1913. He was a progressive. And didn’t much care for our Founding Fathers. Or our Founding Documents. The Declaration of Independence. And the Constitution. He referred to our inalienable rights as a “great deal of nonsense.” Preferring to think of them as privileges granted by the government. Like kings once did. And as kings did not like limits on their power so did Wilson not like limits on his power. For government was a living thing that could grow and do great things. But to do great things it needed great men in leadership positions. Like him. Not hindered by the checks and balances of the Constitution. Or state legislatures. Or people clamoring about their inalienable rights.

This was the age of progressivism. When smart people were in government. Smarter than they ever were before. People who graduated from the finest institutions of higher learning. Or ran them. Like Wilson. Who was president of Princeton. Progressives were smarter than the average American. Who could take America to such great heights. If they could only keep the dumb people from interfering with their vision. And foolishly try to limit the power of the federal government. So, as president, Wilson got a lot of legislation passed that helped make the federal government more powerful. Such as creating the Federal Reserve System. A central bank that could print money as the government needed it. And enacting the first federal income tax since the American Civil War. With this new found wealth the federal government only needed one other thing to take America to great heights. Getting rid of the Constitution.

As much of what Wilson wanted to do exceeded his Constitutional authority he needed a way around that particular nuisance. The checks and balances of the Constitution. Especially after the Framers made it so difficult to add amendments. Requiring a 2/3 supermajority in both houses of Congress. And then ratification by three-fourths of the state legislatures. Not a promising way to make radical changes in the structure of the federal government. So Wilson’s solution was not to amend the Constitution. But to go around the Constitution. With judicial activism. The president should appoint federal judges who share his views of abandoning the intent of the Framers. Thus consolidating power into fewer hands. So they could do more of what they wanted and less what the people wanted. A strong president and a few judges along the way could defy the Congress and the state legislatures and govern as they please. Reshaping America into their vision. Not the Founders’ vision. A progressive vision. Where these few enlightened and very smart individuals would do what was best for us. Even if we didn’t know what that was.

The New Deal was a Revolution made not by Tanks and Machine Guns but acts of Congress and Decisions of the Supreme Court

Franklin Delano Roosevelt (FDR) saw things the way Wilson did. FDR was all for radical change. And breaking away from the constraints of our Founding Documents. And his New Deal did just that. A radical change and expansion of the federal government. And to help get the people to embrace these changes in the long-term he introduced Social Security. To get even more people dependent on the federal government. A program so convoluted he reportedly said that it would be impossible to overturn. He empowered unions. He introduced payroll taxes to fund Social Security. He raised income taxes. Even tried to implement a heavy progressive tax that topped out at 100% for the very rich. And he introduced the withholding tax. As people’s tax bills were to grow so large there would have been push back had they had to write a check at the end of the year for the full amount. But if you took a little bit each pay period the total tax bill didn’t seem so high.

In FDR’s 1944 State of the Union speech he proposed a Second Bill of Rights. However, when talking about our Constitutional rights he called them “inalienable political rights.” By inserting the word ‘political’ those God-given rights of the Declaration of Independence became privileges granted by the government. Which was similar to the way Wilson saw those rights. As privileges granted by government. And privileges that government could take away. Thus emphasizing the power of the federal government over the individual. Making it easier to impose those new federal taxes. So what were those new rights? A good-paying job, adequate food and clothing, recreation, high farm prices for farmers, freedom from unfair competition, a decent home, medical care, a pension, unemployment insurance and a good education. Sound familiar? If you’re an old Soviet communist they do.

Chapter X of the 1936 Soviet constitution included a list of Fundamental Rights. Which included a right to a good-paying job, adequate food and clothing, recreation, medical care, a pension, and a good education. Among others. No surprise, really. As FDR was a fan of Joseph Stalin and what he was doing in the Soviet Union. The same kind of things he wanted to do. But he didn’t have the same freedoms Stalin had. There were such similarities that Whittaker Chambers, a Soviet spy in the US during the time of the New Deal wrote in his book Witness “the New Deal was a genuine revolution, whose deepest purpose was not simply reform within existing traditions, but a basic change in the social and, above all, the power relationship within the nation. It was not a revolution of violence. It was a revolution by bookkeeping and lawmaking…made not by tanks and machine guns, but acts of Congress and decisions of the Supreme Court…” Just like Wilson envisioned.

If Woodrow Wilson, FDR and Joseph Stalin were Alive Today they would likely Endorse Barack Obama and Joe Biden

Alexander Hamilton believed in a strong central government. Partly because he saw what a weak central government did to the Continental Army during the Revolutionary War. And partly because he admired the greatness of the British Empire. He wanted an American Empire. Trusting that only men of virtue would serve in a republican government, he did not fear a federal government from overreaching, and abusing, their power. Thomas Jefferson and James Madison thought Hamilton was mad. And fought against him with every last fiber of their bodies. Because they knew that they couldn’t trust future members of their republican government to be men of virtue. As proven by Aaron Burr. Who lived during the time of the Founding Fathers.

The modern Democrat Party traces its roots back to Woodrow Wilson and FDR. Men hungry for power. And having little virtue. Today we call people like them Big Government liberal Democrats. Who have continued to advance the growth and power of the federal government. Approximately 20% of the population identifies themselves as liberals. And yet the liberals have greatly advanced their agenda. How? In large part through judicial activism. Using the courts to give them what the state legislatures or Congress won’t. Such as when a state passes a referendum on a liberal issue, such as redefining gay marriage, the liberals use the courts to overturn that act of democracy. Or any other that they disagree with.

Now that’s the kind of governing that Wilson and FDR would approve of. Even Joseph Stalin. More and more power centralized in the federal government. The ability to overturn legislation you don’t like. A revolution without violence. It doesn’t get any better than that. If Woodrow Wilson, FDR and Joseph Stalin were alive today they would likely endorse the Democrat candidates Barack Obama and Joe Biden.

2012 Election

Because Workers just don’t Spontaneously Join Together into a Functioning Business they need Capitalists

Karl Marx is the father of socialism. And communism. He was also the author (along with Friedrich Engels) of the Communist Manifesto. The 19th century book that said, “Let the ruling classes tremble at a Communistic revolution. The proletarians have nothing to lose but their chains. They have a world to win. WORKINGMEN OF ALL COUNTRIES, UNITE!” Some people heeded his advice. Vladimir Ilich Lenin, Joseph Stalin, Mao Zedong, Kim Il-sung, Fidel Castro, Ho Chi Minh and Pol Pot, to name a few. The greatest mass murderers of all time. No ideology has killed more than communism. Not even the socialist Adolf Hitler, leader of the National Socialist German Workers’ Party (more commonly known as the Nazi Party) killed more.

According to Marx the history of society has been a class struggle. Before his time it was the landed aristocracy oppressing the peasants in feudalism. Then came along capitalism. Where the new oppressor was the bourgeoisie. The capitalist. The employer. The person that paid others to work. And kept the profits of their labors. Basically that means your boss. Who you may hate while you’re working. But if business is slow and layoffs are coming you desperately hope it’s someone else and not you. And should you lose your job you desperately look for someone else who will pay you to work. Because that’s the only way you know how to feed yourself and buy yourself nice things. Like a home. A cup of coffee at Starbucks. Or a smartphone. Marx called this oppression. While most everyone else would call that being happy to have a job. Because most workers don’t have a clue on how to run a business. Let alone build one out of nothing. For workers just don’t spontaneously join together into a functioning business. They need capitalists. For without capitalists there would be no jobs for workers.

So who does the bourgeoisie oppress? The proletarians. The laborers. The employees of the bourgeoisie. The people that actually do the work. In his day that meant the factory workers. Who were ruthlessly exploited in sweatshop conditions toiling away at monotonous tasks beneath the dignity of a human being. The bourgeoisie was turning man into little more than a machine. That worked until exhausted. And what did they get for their labors? Barely enough to survive. Interestingly, whenever these cruel capitalists turned to actual machines to free these workers from this inhumane labor they cried out against this capitalist greed. For replacing workers with machines was greedy. And destroyed jobs. So on the one hand these jobs oppressed the working class. But on the other they were the best thing that ever happened to the working class.

Karl Marx summarized his Theory of Communism in One Tenet: The Abolition of Private Property

That’s something else Marx didn’t like. Change. The bourgeoisie was always changing things. Updating their factories. Installing new machinery. Forcing the people that did things the old way out of a job. Much like President Obama blames much of our economic woes on today. And our high unemployment. ATMs have put bank tellers out of a job. Self-serve checkout lanes have put cashiers out of a job. One man and a trenching machine put hundreds of ditch diggers out of a job. The electric light put gas lighting workers out of a job. And gas lighting put kerosene lighting workers out of a job. And kerosene lighting put whale oil workers out of a job. And whale oil lighting put candle makers out of a job. It’s this modernization that Marx doesn’t like. It disrupts labor. Making the old worker obsolete. So unions come in to protect these old jobs. Allowing people to earn high wages without having advanced skills. So instead of learning the skills to do the new jobs of the future they can keep doing the jobs of the past. President Obama talks about bringing back high-paying manufacturing jobs. Where workers toil away in those monotonous tasks that are beneath the dignity of a human being. The kind of jobs the parents of college graduates toiled away at to put their kids through college. So their kids wouldn’t have to do what they did. Because the new jobs are better than the old jobs. They’re easier. Safer. And offer higher pay. But the downside is that they take more education and training. Where some people will be better than others. Which is unfair to those who aren’t as good.

Of course to help these factory owners pay these old jobs high wages they need to sell their goods at high prices. Often at higher prices than the market price. So they have to unlevel the playing field. Governments pass minimum wage laws. Union requirements. And minimize the competition. Either by restricting other domestic competitors by high entry costs. Such as licensing fees. Or by placing tariffs on lower priced foreign imports. Raising their prices so they don’t cost less than the higher priced domestically produced goods. Allowing these few factory owners to pay their employees these higher wages. By forcing the general public to spend more money than they would have without these protections. And thereby having to make sacrifices in their lives because they have less of their earnings for their own families. For these reasons Marx called free trade exploitation. Because free trade made it difficult for unskilled workers to earn high wages.

Marx summarized his theory of communism in one tenet: The abolition of private property. For it was the bourgeoisie’s accumulation of private property that exploited the working class. So no one can own anything. Even laborers. Because whatever private property the laborers accumulated came from only one place. From the exploitation of other workers. And that’s not the only thing Marx wanted to abolish. He also wanted to abolish the past. Even though he held on to the jobs of the past. Marx advocated abolishing tradition, customs, institutions and religion. Even families. He wanted to replace education with communist indoctrination. Much like they did in Nazi Germany. In the Soviet Union. In communist China. North Korea. Cuba. Cambodia. In a socialist/communist society everyone is equally subordinate to the state. Where there is no private property. No bourgeoisie. Just a dictatorship of the proletariat. A workers’ paradise. A communist utopia. Where no one looked anywhere but to the state for all of their needs.

If Karl Marx were Alive Today he would Likely Endorse the Democrat Candidates Barack Obama and Joe Biden

So what would it be like in this communist utopia? This dictatorship of the proletariat? There would be a heavy progressive tax. (The US has a progressive tax rate. And the Democrats want to raise tax rates higher yet at the high end.) No right to inheritance. (Democrats want to raise inheritance taxes.) Confiscation of the property of emigrants. (The Democrats want to highly tax/seize money invested outside of the United States that is trying to escape that heavy progressive tax.) A central bank. (The Federal Reserve is a central bank.) Centralization of the means of communication into the hands of the state. (The three television news networks have a Democrat bias. Most newspapers have a Democrat bias. And the two areas that don’t, talk radio and the Internet, the Democrats want to regulate.) Free public education. That indoctrinates our children. (Public education tries to turn our children into Democrat voters. By teaching the unfairness of capitalism. America’s sins. And by scaring our children about global warming. And that only government can protect us from global warming by regulating private industry more. Generous tuition subsidies help continue this work at our colleges.)

The Democrats further this class struggle, or rather create one, with their endless class warfare. The top 1% isn’t paying their fair share of taxes. The Democrats embraced the Occupy Wall Street movement. Pitting the 1% against the 99%. The Democrats employ racism. Tuning any criticism of President Obama into a racist attack. The Democrats try to scare women by warning them of the Republican war on women. Saying ‘women should buy their own birth control’ is code for Republicans hate women and will oppress them if elected. The Democrats constantly divide us. Putting one group against another. Trying to keep the people agitated. And angry. So they will welcome more government into their lives. And the abolition of the capitalists’ private property through that heavy progressive tax. The empowerment of unions. Both private and public. The restriction of our liberties through radical egalitarianism. By punishing achievement. So no one can rise to a higher level of success. Or to a higher level of wealth. So everyone is equally miserable in their workers’ paradise.

So if Karl Max were alive today who would he support in the 2012 election? The party that includes a lot of Marxist doctrine in it all ready. Marx would feel at home in the Democrat Party. In fact it would be hard not to see a bit of communist revolution in it. Especially with communist Fidel Castro and socialist Hugo Chávez already endorsing the Democrat Party candidates. So it isn’t much of a leap to say that if Karl Marx were alive today he would likely endorse the Democrat candidates Barack Obama and Joe Biden.

Week in Review

President Obama loaned a half billion dollars to Solyndra to create jobs of the future. Solyndra filed bankruptcy shortly thereafter. And they are not the only green investment to go belly up. But the president hasn’t given up on his green energy. Especially solar power. Despite China (see Rays of hope for solar firms by Wang Jun and Chen Jia posted 10/26/2012 on China Daily USA).

China’s solar-panel industry has been rocked by recent US duties on its exports to combat alleged dumping and the specter of similar action by European authorities.

At least one company sees the standoff as an opportunity, however…

In the industry’s trade tussle with the United States, Zhou believes, weaker companies will suffer most, and some may fail…

CSG PVTech, a subsidiary of Shenzhen-listed CSG Holding Co, makes panels and modules studded with photovoltaic, or PV, cells that draw on the sun’s rays to produce electricity. Zhou said his confidence in the company is backed by recognition its products have received abroad.

For example, German solar-industry publisher Photon, which tests PV cells and related equipment, since 2010 has ranked CSG-made modules containing monocrystalline-silicon cells among the top three in the world and polycrystalline-silicon modules among the top 10…

Although he oversees both European and US operations for CSG PVTech, it’s clear where Zhou’s focus resides…

“California is a bigger market than Germany,” he said, pointing out that the US state meets the two key requirements – lots of sunshine and a huge demand for electricity.

Jack Pryor, CEO of Access Solar Inc, a Palm Springs installer of panels in homes, said his company is currently outfitting over 110 new townhouses in California with CSG PV panels…

By working with installers like Access Solar, Zhou plans to turn CSG’s focus in the US from business-to-business to business-to-customer, in hopes of making the Chinese company a household name.

He admits, however, that like many Chinese enterprises, a limited understanding of marketing is a hurdle.

“We sell products, but we don’t understand how to sell service,” he said. “As a result, our value chain is too short.”

Zhou aims to sell both.

So not only can the Chinese make solar panels far cheaper than the Americans they make quality stuff. In fact they make one product that is in the top three in the world. And another that is in the top 10. Inexpensive and high quality? Hard to compete against that. But it even gets worse for those jobs of the future. American installers are partnering with China. And China is working on providing excellent service in addition to low prices and high quality.

So it looks like the president’s green initiative will help create those jobs of the future after all…in China. But they’re trying to stop that by slapping anti-dumping duties on them. Of course, that just raises the cost of saving the planet. Discouraging people from installing solar panels on their houses because of these higher costs. So the president’s green initiative is basically a lose-lose. No jobs of the future. And discouraging people from trying to save the planet. Oh, and the president’s war on coal is raising the cost of electric power. So the president’s policies are a triple loser.

Solar power. It was going to pull America out of the Great Recession by creating jobs of the future. Instead we get bankruptcies of government subsidized firms. And higher unemployment than there was four years ago. Is it me or is solar power not the panacea that the president said it was?

Week in Review

One of the ways Obamacare is supposed to reduce costs is by digitizing our medical records. So any of our doctors can pull them up from anywhere. So that every doctor will always have the most up to date file on us. The problem is, it just may not be our doctors accessing our records from anywhere. So some are asking if we should trust the government to protect our confidential information. For they can look across the Atlantic and see that trusting the government with our confidential information was not a wise thing to do (see NHS lost track of 1.8m patient records in a year with sensitive information found in public bin and for sale on the internet by Jack Doyle posted 10/28/2012 on the Daily Mail).

The NHS lost track of 1.8million confidential patient records in a single year, the Daily Mail can reveal.

In worrying lapses in data security, sensitive paper records have been dumped in public bins and electronic records found for sale on an internet auction site.

The worst cases include details of terminally ill patients being faxed to the wrong number, and patient records being stolen and posted on to the internet.

The total is the equivalent of nearly 5,000 records going missing every day. But the real figure is likely to be much higher because in some incidents it was not known exactly how many records were lost…

The Information Commissioner, Christopher Graham, has levied fines totalling nearly £1million on NHS bodies in the last six months…

Trespassers gained access to the site and copies of records – which dated from the 1950s – were posted on the internet…

The worst breach involved a CD containing 1.6million patient records, including personal details, belonging to Eastern and Coastal Kent PCT. The CD was lost when a filing cabinet went missing during an office move.

The trust was not fined, but signed an undertaking with the ICO not to repeat the error.

The worst breach of patient privacy is punished by a promise not to do that again? Well, problem solved. For promises are serious things. I mean, who has ever broken a promise?

The NHS is taxpayer funded. So how does that work? The government fining the government? Do they reduce the amount of money they spend on health care services? Does the government then reimburse the NHS Trust? Or does it simply let more people go without health care?

This is the problem when government provides services. And the oversight. The government provides oversight on themselves. They set the standards. And they measure if they meet those standards. Which probably explains why they fix problems with promises.

So is it any wonder that they’ve lost over a million confidential patient records? No. Will it be any wonder when Obamacare loses over a million confidential patient records? Probably not. Because bureaucrats are bureaucrats. So digitizing our medical records is probably not a good idea. For that matter, neither is Obamacare. Based on the real world example provided by the NHS.

Week in Review

Compounding is basically making small batches of custom medicines. A pharmaceutical company may mass produce a pill that a few patients may be allergic to the hard pill coating or want it in a liquid form. So the compounder makes these custom medicines. So these are small labs producing small batches of medicine. Where the small volume of medicine allow a very high level of attention to detail during the production process. Including many safeguards and precautions. The problems at NECC happened when they were no longer making small batches in a small lab. Their problems started when they started acting like a large pharmaceutical company while still using production procedures of a small lab (see Insight: Red flags ignored for years at firm in meningitis crisis by Toni Clarke and Sharon Begley posted 10/26/2012 on Reuters).

A cracked vial here, a missing label there. The complaints coming into New England Compounding Center, the firm at the heart of the deadly U.S. meningitis outbreak, were piling up…

…More than 300 people who received a tainted steroid sold by NECC that was used to treat back pain have been infected with fungal meningitis and 25 have died.

Interviews with former NECC employees and its customers, and a review of internal documents and newly-released state records, paint a picture of a company whose rapid growth was marred almost since its inception by breaches of regulations governing compounding practices. They also show how regulators failed to punish the company despite repeated violations of the rules…

NECC was formed in 1998 by Cadden and his in-laws, the Conigliaro family, with a $5,000 investment, state records show.

So regulators knew about violations for a decade or so and yet never closed them down. In fact, after numerous violations NECC asked for some leniency in the regulator’s final action. Which they got. Because it’s in the power of a state regulator to do that. For that’s the power of a state bureaucrat.

It was not long before Cadden sought to expand into other states. He found a receptive audience among pain clinics that enjoyed the cost savings NECC offered – in one case, the company told a client it could save $4,500 a year if it purchased a particular steroid through NECC. It also sold to hospitals who were turning to compounders to fill the gaps caused by worsening shortages of prescription drugs from traditional manufacturers.

Nearly 1,200 drug shortages, from chemotherapies to painkillers, were reported between 2001 and mid-2011, with some of the biggest increases seen in the latter half of that decade, according to the Government Accountability Office. Many of the supply disruptions stemmed from manufacturers’ quality control problems and the waning profitability of certain medicines.

NECC thrived on the demand. By the time the company surrendered its license on October 3, NECC was supplying hundreds of hospitals across the country, according to a list of customers released by the FDA…

NECC has stopped operating and faces an array of federal and state investigations, not to mention the prospect of civil suits for liability. Its owners could face criminal charges.

The pharmaceutical industry is a highly regulated industry. Which adds regulatory compliance costs. Lawyers often sue pharmaceutical companies. Because sometimes pills make it through the FDA approval process and yet still hurt people. Which also adds further costs. And despite the high cost of medicine pharmaceutical companies can have pressures on profits. Causing them to drop certain medicines. Leading to shortages. And opening the door to compounders. Who operated under lower overhead costs. Allowing them to offer scarce medicines at low prices.

So that’s the background to this unfortunate crisis. Regulators may have created the environment that encouraged the rapid growth of NECC. And regulators failed to prevent this unfortunate crisis by going easy on NECC despite a record of violations. What ultimately shut down NECC? When their drugs started killing people. For even if no one took any action against them and allowed them to stay in business no one would buy any of their drugs. Because they were unsafe. Which is a powerful incentive NOT to sell drugs that kill people. Not to mention avoiding civil suits and criminal charges.

NECC probably meant no harm. Nor did the regulators that let them do harm. But they operated for about a decade until the market shut them down. Civil and criminal action may follow. But that is after the fact. The government didn’t protect the people until after people started dying. Something the market would have done anyway without the help of government. So is more regulation going to help make our medicine safer? Or will it only further increase the costs of the pharmaceutical companies. Leading to more medicine shortages? And perhaps setting the stage for another NECC?

Week in Review

If you’ve been paying attention to the US presidential campaign you probably have heard that President Obama killed Osama bin Laden. And defeated al Qaeda. This was May 2, 2011. Which is why the Benghazi attack took this administration by surprise. And why they were reluctant at one time to call it a terrorist attack. For with the killing of bin Laden the War on Terror was over. Was this just an isolated incident? Or was al Qaeda keeping busy even with the death of Osama bin Laden? As it turns out, yes. In fact, it was business as usual for some in the immediate months following bin Laden’s death (see ‘Terror suspect trio plotted to massacre crowds using a car fitted with knives and detonating eight suicide bombs in attack bigger than July 7’ by Chris Greenwood posted 10/22/2012 on the Daily Mail).

Three British Muslims were accused yesterday of plotting a suicide bomb attack designed to wreak more devastation than the July 7 attacks.

They bragged how the attacks would have caused ‘mass deaths’ in crowded areas. One of the men was secretly recorded saying the 2005 London attacks had ‘gone a bit wrong’ because the killers forgot to put nails in their bombs.

They also discussed mass poisoning and fixing blades to the wheels of a vehicle before driving it into a crowd of people, and boasted their plot would be ‘another 9/11’.

The trio raised thousands of pounds to fund the plot by posing as street collectors for the humanitarian charity Muslim Aid, the jury was told. Two of the men are alleged to have travelled to Pakistan to attend a terrorist camp and received training with explosives, weapons and poisons. They are said to have recorded ‘martyrdom videos’ explaining their actions which were to be released to the media after their deaths…

Two of the men – unemployed graduate Irfan Naseer, 31, and former security guard Irfan Khalid, 27 – are accused of twice travelling to terrorist camps in Pakistan. They spent 15 months learning how to make bombs, use weapons and create poisons ‘for the sole purpose’ of bringing their knowledge to Britain and using it, the court heard.

When they returned in July 2011, they teamed up with Ashik Ali, 27, whose ground-floor flat was transformed into a safe house to experiment with explosive chemicals. The court heard Naseer was recorded agreeing with another man that July 7 had ‘gone a bit wrong’ because the bombers did not use nails.

Naseer, a heavily-built man known as ‘Chubbs’, used knowledge from his pharmacy degree to mix the chemicals. He bought an instant cold pack, in the mistaken belief it contained ammonium nitrate.

The men were recorded talking about training with AK-47 assault rifles and grenades as well as firing a rocket launcher and the vehicle blade plot, which was in the Al Qaeda magazine, Inspire…

The terrorist cell was allegedly inspired by internet videos and the writings of Osama Bin Laden and US-born Yemeni extremist Anwar Al-Awlaki, who was killed in a drone strike 12 days after the suspects were arrested.

These men were in Pakistan when President Obama killed Osama bin Laden. So they must have known of his death. And the end of the War on Terror. Yet they returned to England and continued their planning and preparations. Lucky for the British that they didn’t let their guard down. For it appears radical British Muslims in Britain didn’t get the memo that the War on Terror was over. Which is why the British pulled their people out of Benghazi as the radical Islamists were increasing their attacks against Western targets.

The world is still not a safe place. Al Qaeda is not defeated. And the War on Terror continues on. Where some of the Islamists are still trying to inflict another 9/11 on the West. And this after the death of bin Laden. Which explains the rise of Islamist violence in Benghazi. And the death of four Americans. Casualties in a war that the Americans had declared victory in that the other side never acknowledged.

Week in Review

Clearly President Obama is trying to move the country away from laissez faire capitalism. And towards something where the government has a much larger role in our lives. Such as Obamacare. More government into our lives. The question is where does it end? For it is a slippery slope. In Europe there was capitalism before there was social democracy. A transition from capitalism towards socialism without a revolution. Does a social democracy end in socialism? Which is a real concern as America is moving ever closer to the European social democracy. For someone who lived in a full-blown socialist state, this trend isn’t a good one (see If You Had Actually Grown Up In A Soviet Country, This Is What You Would Have Experienced by Rob Wile posted 10/22/2012 on Business Insider).

“I grew up in a socialist country. And I have seen what that does to people. There is no hope, no freedom. No pride in achievement.

“And that’s what I see happening here.”

So begins an ad that’s been airing in the run-up to November elections, narrated and paid for by Thomas Peterffy, in support of Republican candidates.

Peterrfy, the CEO of Interactive Brokers, came to America in 1965 to escape Communist Hungary.

He fears a world where, if we’re not careful, “people will lose interest in really working hard and creating jobs. I think this is a very slippery slope.

“It seems like people don’t learn from the past…”

We turned to “Steeltown, USSR,” a book-length work of reportage from current Princeton University History Professor Stephen Kotkin, to see what life under socialism is really like.

Published in 1991, the book is Kotkin’s account of his trips to the Russian city of Magnitogorsk in the late-80s, on the eve of the fall of Communism, and his interviews with the city’s residents.

If you follow the above link you can see what it was like to live in a socialist country. In the Union of Soviet Socialist Republics (USSR). Here are some excerpts:

“This apartment, I waited 18 years for it. During that time, we lived four in one room. No one remembered what color the walls were. You couldn’t see them, they were so covered with our belongings stacked up to the ceiling. I worked and struggled and endured all manner of humiliation for eighteen years for this pathetic, unexceptional new apartment. It makes me sad and angry to think about it. How much evil has accumulated! I have so much on my soul!”

“If you work hard, they demand from you. You have to get up in front of everyone and make speeches; they give you medals with pompous names. So it’s best to stay quiet, not attract attention to yourself. Once in a while, you work like a bull; the remainder of the time, you rest.”

“No one makes a move until we see where the power lies. As soon as it is clear, we all quickly take that side. We’re completely dependent on them. Food, clothes, apartments, furniture, day care, summer camp, vacations — everything is allocated by them according to their lists, with which they rule over our lives. Everyone has something to lose. It might seem you have nothing, but they take something away, and you have even less.”

“A handful of Magnitogorsk youth were fortunate enough to gain acceptance to university in Sverdlovsk, the ‘capital’ of the Urals, or even to Moscow University. Yet even this select group often found itself back in Magnitogorsk upon graduation, unable (in some cases unwilling) to secure the necessary official permission to remain in the larger city.”

Sugar, meat, butter and sausages had to be rationed — they could only be purchased using coupons distributed at residences in accord with the number of people in the household.

Fewer than 50 percent of Magnitogorsk residents enjoyed their own self-contained apartments without living with the rest of their relatives. You had to qualify for new housing by having less than 9 square meters per person. And you couldn’t move.

“There were approximately 30,000 cars for the city’s 438,000 residents (135,000 households). Only 22,000 were privately owned… the wait to purchase a car was more than 10 years.”

“There was only ‘children’s’ shoes, ‘women’s’ boots or ‘men’s’ coats…Discounts or markdowns were not permitted, even if goods were not selling. There were no seasonal sales.”

“An individual established himself or herself in the community not by purchasing a home in a particular neighborhood but by landing a job in a favored shop. ‘The shop or work unit is an entire social milieu,’ one official explained. ‘It’s not a job, but a life.’ In short, the steel plant was not relaly a ‘business’; rather, it was an industrial welfare agency.”

“At home we get together with friends, sit around the talbe. All we do is talk about our problems, and insufficienceis, endlessly, until someone bangs the table and shouts, ‘Enough. No more about that.’ But what else can we discuss?”

This is where you end up when you move away from capitalism and towards socialism. A grey and dreary life. Long waiting lists for apartments and cars. Where hard work is only rewarded with more hard work. So workers strive to do the minimum. You live in fear of the authorities because everything you have in life is dependent on how they felt towards you. If you were quiet and suffered your privations quietly you experienced no new privations. If you complained you suffered more privations. The state allowed few to go to college. And those that did rarely saw an improvement in their lives. They rationed your food. And forced you to live with your relatives in tiny apartments. Everyone wore the same shoes, boots and coats. And few found any enjoyment in life.

So should Americans be worried about sliding towards socialism? Well, soon our health care will be dependent on some bureaucrat’s whim under Obamacare. Student loans are now provided by the government. More people are dependent on the government for their food than ever before. And their housing. The government is subsidizing green companies that can’t compete in the market place. To provide ‘high-paying’ jobs in companies that often go bankrupt. So a lot of what is happening typically doesn’t happen in laissez faire capitalism. These are things that are closer to socialism than capitalism.

These expansions in the welfare state come courtesy of class warfare. The government’s relentless attacks on those who don’t need government benefits. Accusing them for not paying their fair share in taxes. Creating anger in lower-income people. And agitation. To support further transfers of wealth. All the elements of a worker revolution. But without the actual revolution. Because they’re doing it at the ballot box.

Life is better under capitalism. Which is why athletes from behind the Iron Curtain left their socialist paradise whenever they could. Ballet stars. Even military jet pilots who flew their planes to freedom. Unless Americans want a country like the country these people fled we probably should do something about our slide on that slippery slope.

Week in Review

The costs of an aging population (due to fewer people having babies these days than in our parent’s generation) are causing great cost pressures on Britain’s National Health Service. The number of elderly patients is rising. And they’re consuming more health care resources. While the tax base is shrinking. With fewer people paying taxes overall tax revenue falls. You don’t have to be highly skilled in math to see the problem here. They’re spending money faster than they can get it. And when you have a problem like that your options are few. You cut costs. Increase wait times. And ration services (see NHS hearing services ‘being cut’ by Nick Triggle posted 10/22/2012 on BBC News Health).

NHS hearing services are being scaled back in England, an investigation by campaigners suggests.

Data obtained by Action on Hearing Loss from 128 hospitals found more than 40% had seen cuts in the past 18 months.

In particular, the study found evidence of rises in waiting times and reductions in follow-up care.

The report is the latest in a growing number to have suggested front-line care is being rationed as the health service struggles with finances.

The NHS is in the middle of a £20bn five-year savings drive.

The government believes the savings can be made by increasing productivity.

But in the past year reports have suggested everything from hip and knee operations to eye surgery is being cut.

As American health care transitions into full scale Obamacare these are terms we’ll start to hear. Cost cuts. Wait times. And rationing. You know, before they cut our hearing services. Then these things will happen. We just won’t hear about them.

Incidentally, the NHS is trying to cut about $32.2 billion from their approximate $162 billion budget. That’s a 20% cut. According to Kaiser, the US spent about $2.3 trillion on health in 2010. A similar 20% cut in our health care spending would total approximately $450 billion over five years. Or about $900 billion over 10 years. Which is close to what the first CBO score came in for Obamacare. When they were counting revenue for some years but no costs. So basically to do what the British are doing would require the repealing of Obamacare. That’s how big these numbers are. And why we should repeal Obamacare. Before our excellent health care system suffers these cost cuts, wait times and rationing.

Week in Review

Poor Amtrak. Always the example of government at its worst. Subsidizing passenger rail when all private railroads gave up on it long ago. Because you can’t make money on passenger rail. So what does the government do? They furnish a service that no one is demanding. Pouring billions of tax dollars into a failed economic model to desperately try to keep it afloat. And Amtrak still loses money. Despite selling cheeseburgers at $9.50 (see Amtrak’s food service: How to lose money on $9.50 cheeseburgers posted 10/23/2012 on The Economist).

JOHN MICA, the Republican chairman of the House Transportation and Infrastructure committee, has held many hearings on Amtrak, America’s government-run passenger rail company, over the past few years. Few, though, have drawn as much attention as an August discussion of—what else!—hotdogs and beer, when Mr Mica noted that, over the past three decades, Amtrak has not once broken even on its food offerings.

… Andrew Biggs at the American Enterprise Institute, a conservative think-tank, suggests that Amtrak’s labour costs are to blame.

If you follow that link you will see these numbers:

How do you lose $85 million per year selling $9.50 cheeseburgers, as Amtrak reportedly has?

One way is to pay Amtrak employees 19% more in salaries and benefits than comparable private sector workers.

… Amtrak salaries were on average 4% lower than private sector levels. However, benefits were 81% higher than private sector levels, including 19% more paid leave, 181% more generous health coverage, and 51% more generous retirement benefits. This helps explain why, over a 7-year period, Amtrak quit rates averaged 2-3% per year while private sector quit rates were 26-27%. No one wants to give up a job with so many perks.

Going back to the Economist article:

Labour costs are part of Amtrak’s problem, but they’re not the heart of it. That honour goes to the company’s unprofitable, unpopular, slow and generally indefensible long-haul routes…

Amtrak loses a lot of money providing food service on its long-haul routes because it loses a lot of money on almost everything related to those routes. Long-haul passenger train trips, especially at Amtrak speeds, are for hobbyists, people with lots of time and very restricted budgets, and people who are afraid of flying. No private-sector company without Amtrak’s political and legal obligations would continue to operate its long-haul routes without substantial changes.

All passenger rail loses money. Except for, perhaps, the Bullet Train in Japan. And the TGV in France. These are the only two trains (at least they were at one time) that actually make a profit. All other trains cannot survive without taxpayer subsidies. Because rail transportation is very expensive. Moving heavy freight by train works because it’s the most cost efficient option for heavy freight. And sometimes the only option. But moving people? There are a lot of other options. We can drive ourselves. Take a bus. Or fly. All of which are more cost efficient than a train. A commuter jet, for example, can make three round trips in the time it takes a train to make one trip. One-way. So that’s six revenue-producing trips for the commuter jet versus one for the train. Which is a big reason passenger airlines can be profitable while Amtrak cannot.

Trains require an enormous amount of infrastructure. And a lot of people. All of this just to move a few passengers. Who don’t weigh much. But require a lot of space for their weight. So your typical passenger train doesn’t carry a lot of people. To recover the full cost of moving a passenger train from point A to point B in the ticket price would require a ticket price far greater than anyone would pay. Which is why the government subsidizes passenger rail. Because no one would board a train otherwise.

The long-haul trains add porters, bartenders, food staff, wait staff, etc. Greatly adding cost to a money losing route. Making these trains the biggest losers. In large part to those employee benefits. For those employees on the train. And those not on the train. To all of those who help get it from point A to point B. And the insufficient number of revenue-producing trips these trains make to cover those costs.